Forever 21, the once-mall staple, closes its doors in the U.S. after filing for bankruptcy for the second time. On March 16, the company filed in the U.S. Bankruptcy Court for the District of Delaware, citing online competition, foreign rivals, shifting consumer trends and rising costs.
The world first saw Forever 21 in 1984 when Korean immigrants Jin Sook Chang and Do Won Chang founded the brand in California. For millennials seeking designer-inspired clothing, Forever 21 quickly became a hit. In 2015, sales topped $4 billion, earning the founders a combined worth of $5.9 billion, according to NBC News.
Forever 21’s booming success stayed in the 2010s, but fashion trends did not. Online retailers like Shein became strong competitors. Some longtime shoppers, like Lauren Nalian, found the news shocking and sad after years of shopping there.
“When I heard Forever 21 was closing, I was pretty surprised. I had always thought Forever 21 was a significantly popular retailer that competed with other large clothing stores. I have continuously shopped at the store for years. I thought the company was maintaining sales enough to stay open. The prices weren’t bad either. I’m sad but excited to see what my shopping center will replace the building with,” Nalian said.
The reality turned out differently for the company. In 2019, it filed for bankruptcy for the first time. After filing for Chapter 11 protection, it aimed to reorganize debt and stay in business. Shortly after, the COVID-19 pandemic struck, and its impact hurt the brand even more. That brings the company to today, when its second bankruptcy led to the closure of all U.S. stores.
Another shopper, Amber Ellis, wasn’t surprised by the news. She had seen it coming due to rising prices and a lack of trendy offerings.
“I accepted it pretty easily, but only because, over the past few years, I’ve noticed a drastic increase in pricing while their clothing quality hasn’t improved in the slightest. It really deters you from shopping when you pick up an extremely thin shirt and read that it’s twenty dollars,” Ellis said.
For now, Forever 21’s U.S. website remains open, though it’s unclear for how long. The company’s 200 international locations operate under a different license, meaning they are not included in the bankruptcy and will continue running.
F21 OpCo, the company operating Forever 21, released a statement to businesswire.com. In the release, Chief Financial Officer Brad Sell cited challenges from foreign fast-fashion competitors, rising costs and economic pressures on core customers as key factors in the decision.
“We made the decision to file for Chapter 11 to implement a court-supervised marketing process to solicit a going concern transaction, and, in the absence of such an arrangement, an orderly wind-down of operations,” Sell said. “While we have evaluated all options to best position the company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends.”
As the retail industry continues to evolve, Forever 21’s story highlights the difficulty of keeping up in an ever-changing market.
